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The
quantum of reduction will be decided at the cabinet meeting to
be held on Thursday, home minister V S Acharya told reporters
here on Tuesday while officials in the finance department
hinted at a one rupee cut on every litre of petrol and diesel.
"We
will also decide on where the reduction should be effected
—- petrol, diesel or LPG," Acharya said. The
announcement comes in the backdrop of the meeting of the
empowered committee of finance ministers held in New Delhi on
Monday where the states had agreed to reduce sales tax on
petro-products.
Karnataka
too resolved to join the bandwagon, but with a rider.
"The Centre should bear 50 per cent of the loss incurred
by the state government because of the tax-cut," Acharya
said.
To
substantiate the demand, Acharya pointed to several welfare
schemes that have been taken up in the state in anticipation
of taxes from the sale of fuel. "The state government
expected an additional Rs 380 crore because of the recent
hike.
Now,
if the taxes have to be cut, the state's exchequer would incur
a huge loss and that would affect development programmes
badly. So it is pertinent that the Centre supports the state
government," Acharya said.
In
fact, the fuel hike has caused losses to the tune of Rs 170
crore to the state-owned public transport corporations and
transport bills of all the government departments have
increased by Rs 40 crore, he said and warned that a reduction
would offset the arithmetic and make resource-mobilisation a
difficult task for the state government.
Karnataka,
in fact, has not reduced taxes on petro products in the last
one decade. The cabinet may not go in for a major reduction as
taxes on petro-products are a major sources of revenue for the
state government, nearly Rs 3,400 crore is generated from
sales of petrol and diesel.
Per
day consumption of petrol and diesel in the state is Rs 31
lakh litres and Rs 81 lakh litres repectively. The state
government, which has kept the petro products out of the VAT
regime and is instead following the ad valorem system, charges
28 per cent sales tax on petrol and 20 per cent on diesel.
This
apart, there is a five per cent entry tax that is levied on
every litre of petrol and diesel that enters the state.
Source
: Business Standard, India, dated 18/06/2008
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